News

November 03, 2008

A Technology Response To ‘Low’ Oil Prices

By David Bamford

Roughly speaking, oil prices are down to 50 per cent from their peak of six months ago. Putting to one side the observation that most economists did not have prices as high as US$60 per barrel anywhere on their projections for 2008 three years ago, it’s still worth asking how oil & gas companies are going to respond to these ‘low’ oil prices?

I would have thought most companies would choose a price in the range US$60 to US$80 per barrel as a planning basis for the next three years and that this will mean:

1. significant reductions in exploration budgets
2. strong downward pressure on costs, together with
3. a focus on ‘squeezing every last drop from the lemon’, that is making the most of currently producing or soon-to-be-developed fields.

I believe that a major contribution to the...